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Employer Health-Care Delay May Goose Exchange Enrollment

Increased use of exchanges could bolster Obama’s health-care overhaul.

Freeing companies from a U.S. government mandate to offer employees health care is setting off a chain of events that may enlarge the pool of uninsured Americans. That may be good for President Barack Obama’s health-care overhaul.

The success of the 2010 Affordable Care Act is largely dependent on how many people are willing to buy subsidized health plans through government exchanges. Most of the people affected by Obama’s decision this month to delay the employer mandate to provide health care will now be eligible to use the exchanges when they open Oct. 1.

The law’s creation of state-by-state marketplaces had targeted about 26 million of the more than 50 million uninsured Americans for coverage. “A few million” more may now be made eligible by the delay, said Larry Levitt, senior vice president at the nonprofit Kaiser Family Foundation research group.

“This administration needs people to enroll in health insurance, and they want them to enroll in health insurance through the exchanges,” said Chris Condeluci, a lawyer at Venable LLP in Washington who helped write the Affordable Care Act while working as a Senate Finance Committee aide.

Obama, a Democrat, has been stymied by Republicans in his effort to implement the law. The employer-mandate delay has emboldened Republicans, who have three House committee hearings scheduled this week on the Affordable Care Act, and have set plans to vote on legislation to scale back two major provisions.

“Each provision you delay continues to demonstrate that the entire law is unworkable,” U.S. House Speaker John Boehner, a Republican from Ohio, said in a July 9 letter to Obama.

Boehner demanded additional information about the employer-mandate delay, including estimates on “the change in the number of individuals receiving subsidies through” the exchanges.

The July 2 announcement by the Obama administration lets employers with 50 or more workers wait until 2015 to comply with a mandate to provide full-time workers with health insurance. Former Democratic Party Chairman Howard Dean said increased enrollment in the exchanges will be “an unintended effect” of the employer-coverage delay.

“What this means is that if you don’t have insurance, the exchange is your default position, not the employer,” Dean, who is a medical doctor and served as Vermont’s governor from 1991 to 2003, said in a phone interview. “This will drive more people into the exchanges, and that’s good.”

If the exchanges are to benefit, it will be as a result of many separate decisions by large employers affecting small numbers of workers. For athletic apparel retailer Foot Locker Inc., the delay may affect “a few hundred” people out of its 38,000-person workforce, said Ken Hicks, the New York-based company’s chairman and chief executive officer.

“For larger companies, it’s not that big a deal,” he said in a phone interview.

In 2012, 95 percent of companies with at least 50 workers offered health benefits to at least some of their workers, according to Menlo Park, California-based Kaiser, which has been tracking implementation of the health law.

That leaves a thin margin for exchange enrollment beyond what was already projected, said Kevin Counihan, the executive director of Connecticut’s exchange. The effect of the employer-mandate delay is probably “more symbolic than substantive,” and it’s up to the exchanges to get word out that the programs are available, he said.

The affected Foot Locker employees work 30 to 40 hours a week. Instead of immediately reducing their hours to less than 30 -- the threshold that triggers the health law’s requirement for employers to offer health care -- companies will see the delay as something that “allows you time to get them situated properly,” Hicks said.

“We now have time to get them to the 30 hours or make a determination whether we want to make them full time,” he said.

Wegmans Food Markets Inc., a supermarket chain based in Rochester, New York, said in a statement that the health law means “eligibility requirements will change” for part-time employees, though it didn’t say if anyone would lose their company-sponsored coverage and be eligible for the exchanges.

At least 14 states are building their own exchanges, and the federal government is setting up the rest for the remainder of the 50 U.S. states.

About 7 million people are expected to get coverage through their state exchanges in 2014, according to the Congressional Budget Office, and the Obama administration has said at least 2.6 million of them would need to be young and healthy to hold down costs for insurers and in turn keep premiums affordable.

Young People

Any increase in enrollment, particularly by young people such as restaurant workers, will help the exchanges by making their pool of customers less risky to cover. That could lead to lower premiums starting in 2015, said Jay Angoff, a Mehri & Skalet law partner who had been director of insurance oversight at the U.S. Department of Health and Human Services under Obama.

“The insurance industry obviously has a huge economic interest in the exchanges working and getting people into the exchanges,” he said in a phone interview. “I think you’ll see the industry marketing aggressively and creatively to get young healthy people into the exchanges.”

About 25 million people are expected to gain coverage from the Affordable Care Act by 2016, which includes the state exchanges, an expansion of Medicaid and reduced employer coverage, the Congressional Budget Office said in a May report. The CBO had projected when the law was signed in 2010 that 32 million uninsured people would be on a health plan within a decade, and a year later raised its estimate to 34 million.

Expectations for the $1.3 trillion health-care system overhaul are being pulled back as the expansion initially relied on governors to build the network of insurance marketplaces and expand Medicaid, the joint federal-state insurance program for the poor. At least 22 Republican governors have said they’ll refuse to participate in the health exchanges and a Supreme Court decision lets them also opt out of the Medicaid expansion.

The Republican-controlled House of Representatives has voted 37 times to repeal or defund all or part of the Affordable Care Act, which was enacted with only Democratic votes. Two legislative votes planned for this week include a delay of the employer mandate, which Obama is already doing, and a delay in the so-called individual mandate that requires most Americans to have health insurance by 2014 or pay a fine.

Two of the hearings, by the Ways and Means Committee on July 17 and the Energy and Commerce Committee on July 18, examine the administration’s delay of the employer requirement. The third, by the Oversight and Government Reform Committee, will explore privacy concerns related to a computer system the government is building to support enrollment in new insurance programs.

“For the last three years, the Affordable Care Act -- commonly known as Obamacare -- has been plagued by broken promises, projected cost increases, delays, and missed deadlines,” Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said in a July 11 statement. “It’s clear we have no idea of the full scope of delays and disarray that may be coming.”

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